About Rand Water Introduction (759KB)

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About Rand Water Introduction (759KB) “To life!” Contents Chairperson’s message 8 Acting chief executive’s report 10 Let’s raise a glass of the official drink of Gauteng – Board members 16 delicious, clean, fresh water supplied by Rand Water. Portfolio Integrating Committee (PIC) 18 Review of operations 20 Without water, there can be no life. It is the presence Stakeholder review 36 of sufficient water that makes life on Earth possible. Environmental and quality review 56 Governance and risk review 76 But not all parts of our planet have the same access to Consolidated annual financial statements 83 usable water. South Africa is one of the less fortunate Statement of responsibility parts of the globe in this respect – and Rand Water by the members of the Board 84 faces the challenge of supplying the potable water Independent auditor’s report to needs of the economic hub of the country – the the Minister of Water Affairs and Forestry 85 only such hub in the world that is remote from any Report of the audit committee 86 significant water source. Board members’ report 87 Significant accounting policies 94 But this is a challenge that Rand Water has risen Consolidated income statements 101 to with success for more than a century – an Consolidated statement of recognised income achievement well worth a toast at this point in the and expense 101 United Nations’ International Decade for Action ‘Water Consolidated balance sheets 102 for Life’. Consolidated cash flow statements 103 Notes to the consolidated annual financial statements 104 Rand Water Annual Report 2008 1 underlying Rand Water VISION THE RAND WATER STORY Rand Water is an industry leader and partner of choice For over 100 years, Rand Water has been supplying in sustainable bulk water services. quality bulk potable water to Gauteng and surrounding areas. MISSION To consistently meet the expectations of our customers, Rand Water’s success is based on sharing in the partners and the government by strengthening our pioneering spirit that has led to Johannesburg’s capability to: growth. The same spirit has driven our growth in terms l attract, develop and retain leading edge skills in the of infrastructure and quality. We have significantly water sector increased our area of supply. l sustain a robust financial performance l develop and sustain a globally competitive Rand Water has a reputation for supplying water that operational capability ranks alongside the best quality potable water in the l enter into and sustain productive partnerships world. That is why it is appropriate to raise a toast “to l deploy cost-effective technologies life”, and drink it with Rand Water in celebration of its achievements in promoting sustainable life in South VALUES Africa – and even beyond this country’s borders. l Caring l Equity l Excellence l Integrity l Spirit of partnership STRATEGIC OBJECTIVES l Ensure that Rand Water continues to be a viable, sustainable, bulk water services provider l Position Rand Water as the partner of choice in water services l Satisfy all customers l Improve business efficiencies and quality l Achieve transformation l Create a dynamic learning organisation 2 Rand Water Annual Report 2008 CORE BUSINESS Rand Water is the largest bulk water utility in Africa and is one of the largest in the world, providing bulk potable water to more than 11 million people in Gauteng, parts of Mpumalanga, the Free State and North West – an area that stretches over 18 000 km2. Rand Water’s distribution network includes over 3 056 kilometres of large diameter pipeline, feeding 58 strategically located service reservoirs. Its customers include metropolitan municipalities, local municipalities, mines and industries and it supplies, on average, 3 653 million litres of water to these customers daily. Rand Water is an organ of state, reporting to the Department of Water Affairs and Forestry. Throughout its long history, Rand Water has remained financially self-sustaining. Its financials are affirmed by Standard & Poor’s rating of its long-term local currency, corporate credit rating as A+ and its long-term foreign currency, corporate credit rating as BBB+. ACCOLADES l Rand Water was nominated as one of South Africa’s top 500 companies as a result of its contribution to the growth of the economy and job creation. l Ekurhuleni Public Management Review Award for Rand Water’s contribution to the economic growth and development in Ekurhuleni. l Sedibeng Public Management Review Award for Rand Water’s contribution to the economic growth and development in Sedibeng. l Rand Water’s Water Wise Education team won the 2007/08 International Water Association Marketing and Communications Award. Rand Water Annual Report 2008 3 Water Sector Value Chain Abstraction, purification and distribution Water Sources of bulk potable water Since 1974, the Tugela-Vaal scheme has fed water into the Vaal River to supplement its supply. This is done by inter-basin transfer of water from the Tugela River in DWAF KwaZulu-Natal. This means that water is released into Raw bulk water the Vaal River system from the Sterkfontein Dam via the Nuwejaar Spruit and the Wilge River. The availability of water from the Tugela-Vaal system made it possible for Rand Water to maintain restricted, but adequate, water supplies to consumers during major droughts – from 1983 to 1987 and in 1995. The Lesotho Highlands Water Project (LHWP) also trans- fers water to the Vaal Dam. This entire project comprises six dams and three pumping stations. It diverts the flow of the Orange River via tunnels through the Maluti Mountains, channelling the water to the Eastern Free State, and then on to the Vaal Dam. The first phase of the LHWP was completed in 1998 and MUNICIPALITIES is designed to meet the demand for water in Gauteng END USER Deliver water and sanitation through up to the year 2020. Consumer/industry reticulation networks 4 Rand Water Annual Report 2008 Our footprint in South Africa AREA OF SUPPLY Rand Water is mandated to supply water to the area mainly centred around Gauteng. It includes some areas adjacent to Gauteng, such as the Mpumalanga Western Highveld, the Rustenburg area in North West and some areas in the Free State. Original Area of Supply Extended Area of Supply Rand Water Annual Report 2008 5 Performance summary OVERVIEW The Department of Water Affairs and Forestry, represent- ed by the Minister of Water Affairs and Forestry, is Rand Water’s sole shareholder. Rand Water is controlled by a board of directors, which consists of non-executive members appointed by the Minister of Water Affairs and Forestry, as well as one executive member – the Chief Executive. The day-to-day management of Rand Water is the re- sponsibility of the Portfolio Integrating Committee (PIC), which is made up of the Chief Executive and Portfolio Heads. Rand Water Services (Pty) Ltd and the Rand Water Foun- dation (a Section 21 company) operate as subsidiaries and are wholly owned by Rand Water. 6 Rand Water Annual Report 2008 (Performance summary) continued REVENUE BULK TARIFF RETURN ON ASSETS Revenue Bulk Tariff Return on Assets (Rand/kilolitre) (Percentage) 5 000 4 15 4 000 3 3 000 10 2 2 000 Rand Rmillion 1 1 000 5 Percentage 0 0 2004 2005 2006 2007 2008 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 VOLUME SOLD BUSINESS PERFORMANCE Volume Sold 2004 Actual 2005 Actual 2006 Actual 2007 Actual 2008 Actual (megalitres/day) as restated as restated 3 700 Profit margin % 12,04 14,29 16,16 18,01 18,86 Profit per employee R’000 126,70 162,18 197,41 251,80 274,66 3 600 Average cost of capital % 12,00 13,00 13,00 13,00 13,00 3 500 Debt-equity ratio 0,69 0,29 0,25 0,21 0,18 3 400 Return on assets % 10,2 10,8 12,5 11,9 10,9 3 300 Assets turnover ratio 1,2 1,2 1,2 1,1 1,2 3 200 Current ratio 1,8 0.9 1,4 2,0 2,52 2004 2005 2006 2007 2008 Rand Water Annual Report 2008 7.
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